Matt operates a business that locates and purchases specialized assets for clients, among other activities. Matt uses the accrual method of accounting but he doesnt keep any significant inventories of the specialized assets that he sells. Matt reported the following financial information for his business activities during year 0. For each of the following items determine the effect on the taxable business income.

a. Matt has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully. In December, Matt delivers $12,000 worth of gadgets to the city that will be tested in March. Matt purchased the gadgets especially for this contract and paid $8,500.

b. Matt paid $180 for entertaining a visiting out-of-town client. The client didnt discuss business with Matt during this visit, but Matt wants to maintain good relations to encourage additional business next year.

c. At the end of the year, Matts business reports $9,000 of accounts receivable. Based on past experience, Matt believes that at least $2,000 of his new receivables will be uncollectible.

d. In December of this year, Matt rented equipment to complete a large job. Matt paid $3,000 in December because the rental agency required a minimum rental of three months ($1,000 per month). Matt completed the job before year-end, but he returned the equipment at the end of the lease.

e. Matt paid a visit to his parents in Dallas over the Christmas holidays. While he was in the city, Matt spent $50 to attend a half-day business symposium. Matt paid $200 for airfare, $50 for meals during the symposium, and $20 on cab fare to the symposium.

Item	Treatment	Why
A
B
C
D
E